Matthews Cremation: Championing the Memorialization Trend

By Mark Adkins, Business Opportunities Journal. Feb 2009.

Here is a unique scenario: instead of purchasing a franchise, you purchase the equipment you need to start your business, and the manufacturer helps you every step of the way, assisting in the design of your store plans, filing for permits, even providing sales collateral and a professionally designed website. You gain many of the benefits of a franchise, without a royalty or national marketing fund payment.

Matthews Cremation is offering this support to its crematory equipment customers. According to the company, pet owners in the United States are under served in death care services for their pets, with too few options for pet memorialization. Matthews Cremation sees enormous growth ahead in the field as entrepreneurs are beginning to address this need, providing a much needed emotional outlet for grieving pet owners. What follows is my interview with Steve Schaal, Division Manager, Sales & Marketing, Matthews Cremation. --Mark Adkins

BOJ: I understand that Matthews Cremation is a leading equipment manufacturer?

Steve: Matthews Cremation is one of six divisions of Matthews International, a publicly held company, and is the largest manufacturer of crematory equipment for the human and animal audience. Matthews International acquired the company, previously known as Industrial Equipment Engineering, or IEE, back in the late 90s. That business was started in 1946. So, for over 50 years we’ve been building equipment.

BOJ: So this is an industry that has been around many years?

Steve: We have customers that go back to the start of our own business. The early pioneers started in the ‘70s and ‘80s. They were basically contracted by the county or the state or the local jurisdiction to help in, and I hate to use this word, the disposal.

But for the past four or five years, we have been championing the development of a pet funeral home business model. Serving the animal care industry has been an intricate part from the beginning, so the equipment that we’ve been building has been appropriate for both audiences, meaning the human side as well as the animal side. It has only been within the last five years that we have been studying quite intensely the opportunity in developing this model as a pet memorialization positioning.

BOJ: What is behind this shift toward pet memorialization?

Steve: Back in 2003-2004, we began a very thorough consumer research study on various components of the death care industry. We had an independent company come in and conduct research for us and in the process captured over 190 hours of video footage of people sharing their stories about not only the experiences of going through the loss of a family member, but equally important the loss of a family pet, especially the process of how they were, or were not, able to resolve the grief of the experience. What really hit home for us was when you are video taping, you have people sharing their stories about a loss, about a father, a mother, a brother or sister, but when we began shifting the focus from the human loss to the pet loss, the tears just began to flow. I had to stay out of the way and basically sit in a room watching video footage of this taking place, watching people breaking down, crying because the grief was so dynamic and the loss was still real. They had no outlet. They had no channels through which to get care. So for us it clearly symbolized there was a market opportunity. There was a service opportunity that stands before us.

BOJ: And you developed a franchise business model out of this research?

Steve: No, we’re simply a supplier. Our business is in the manufacturing side. But we do an awful lot of consulting, we do an awful lot of marketing and brand development. We have an extensive line of pet loss memorial products that can be built into the retail center of the pet funeral home, so we have all of the different aspects. It’s kind of one of the more interesting discussions when you talk about franchising, because we do all of it, but we don’t do franchising.

But I will share with you that there are many that we have set up who are looking at franchising, and are carrying a big picture vision of what this truly could mean from a national perspective.

BOJ: What do you see as the business opportunity that is available for entrepreneurs in this field? Is it providing pet memorial services from a more holistic perspective, helping to take care of the pet owner’s needs in the grieving process, above and beyond the physical cremation process?

Steve: What we are championing, and this is a different model from the earlier pioneers, is we’re actually encouraging them to invite families to come to their facility and have an area laid out that not only is professional in nature, but more importantly gives them a chance to sit down and discuss the types of arrangements they would like that can be as modest as the service itself or may be a committal which allows them a chance to have a minister come in and provide a memorial service, offer a variety of different products from which to choose. From garden memorials to burial products to scattering products, all the things that you would find in the human side would be just as applicable to the animal care side. Even including memorial video tributes.

We just recently went through the loss of a dog, our dog passed away, 11 years old, and my children spent a few days going through the albums, and we came up with a collage of pictures that we put to a video tribute for our dog Samantha. You know, my children are older, but it’s funny, the tribute they have is located on their Facebook page. My one son is 6’3”, 220 and he can’t even talk about Samantha without choking up with this video that he helped create with us. It’s been a wonderful relief for him to occasionally be reminded, to be able to turn it on and to work through the celebration, as we like to call it, of companionship.

BOJ: So it is a major shift toward serving the pet owners’ grief, not simply providing the cremation services?

Steve: There are many people carrying this profound loss, and still hiding for fear of being minimized, the pain being minimized, and there are many of those who until you talk about it, until you identify it, until you build the community network, the awareness of it, there’s a lot of them out there that are simply just going through the process and can not talk about it. And this could be a death of a pet that could have passed away years ago that they’re still harboring inside. What we’re doing, the movement that is happening, and believe me, it’s being driven by the consumer, the consumer is driving this direction, not us, we’re simply recognizing the calling and making it an opportunity across the country. The fact is that they’re looking for something that is appropriate and meaningful for them and the definition of that can be anything. It could be someone that says “you know what, I really don’t want my pet back, go ahead and do whatever you do,” and they simply let the pet go. Or, like we did, they say “No, I want Samantha returned, I want her back, I want to pick out what we’re going to do, I want to pick the right garden material, I want to pick the right cemetery ground, I want to pick what we believe is most appropriate for us.

BOJ: Are the services provided in the industry fairly uniform?

Steve: There are two types of services that you will find when you are networking with these facilities and that is either what is called a communal service or a private service. You can imagine that the communal service is nothing more than a cremation taking place with a certain quantity of pets, all being done at the same time. The private cremation services are obviously one pet only, one container at a time being cremated so that way those cremated remains are not comingled or confused with any other pets. They are distinguishably yours so that this way they can be returned directly back to its owner. What we see is that for the early pioneers, for the ones that first got into this business, almost 90% or better of the services they provided were in the community type relationship. People were just asking for their pets to be cremated without an awareness or understanding. What we’re discovering is that now that percentage is more like 65% are private, and the smaller percentage is communal.

BOJ: And consumers are willing to spend more for these enhanced services?

Steve: The real revenue dollars are in the pet loss memorial care. Once you build the educational awareness for consumers, whether its at the veterinarian’s office or the humane societies or at the funeral homes, wherever the audience, wherever the contact is made, once you describe the difference, the last thing they are going to do is have that pet be placed with a group of others and scattered in their field. More appropriately, they would be returned to them so that they can decide how they wish to memorialize. So what we see, or what we’ve learned over the last several years, is that people can distinguish the difference. If you are looking at your community and see that there are providers and think “I can’t possibly do this in my community because XYZ business is down the road handling it.” Please don’t be confused about those who do mass incinerations and those who are building a funeral model for pets. As the profit number, the revenue driven number is a distinctly different because you’re building the model based on cremation rates per pound versus a cremation rate per service and the dollar variant is substantial.

We’ve learned that when a family is making arrangements for their pet and they’re advised what the cost is, the odds of debating or negotiating is absolutely minimal, in contrast to other services where you almost anticipate a reaction or a negotiation or “can I cut this out, or can I remove this.” It’s amazing when it comes to the services for pets, how the wallet is wide open.

BOJ: What are the components, as well as equipment, needed to provide this service?

Steve: First of all, you would have to decide on a piece of equipment that would be rated by its production speed. What I mean by that is that the equipment is designed to do a certain amount per hour. Let’s just say in this particular instance, pounds per hours. Typically an entry level piece of equipment runs about 75 pounds per hour and has the capacity to hold somewhere in the range of 300 pounds. Now that’s just cremation equipment itself. You also should be aware, and most people don’t know this, that cremation does not dissolve the bones. Cremation develops the ash and bone fragments, but those still need to be processed. What that means is that they have to be processed to a fine powder and that would be done by a machine that you would transfer the bones from the equipment, the crematory equipment to a processing machine that actually is an industrial type blender that cremates the ashes and bone fragments to a powdery substance which is what is transferred to an urn. So you need a piece of equipment and you need a processor to be able to conduct the service. Certainly because of the volume, it’s wise to have refrigeration, whether it’s a refrigeration cooler or a freezer. It’s important to have something to hold while you are conducting your day to day business. Since most veterinary clinics have similar type equipment, normally when you are out making your removals during the day and you’re bringing them back to your place of business, that needs to be staged. It’s not only for the dignity and the handling of the pet, but also for the protection of the operator.

BOJ: What are the basic steps a new business owner needs to go through to get started?

Steve: First of all, they have to find a location that will allow them the proper zoning in which to invest in equipment because of the crematory equipment. A lot of them are in residential communities, but it’s important that they identify the appropriate approval process. The first thing that you’re going to have to understand in your review of commercial real estate is that you have to be able to obviously get the permission to install equipment. For most of the clients that we work with today, because we work with a couple hundred a year in the business development side, it’s the fact that they probably are looking at industrial areas for this initial model. But I caution anyone that is looking at that as a possibility is although there might be a lower threshold to get permission to install equipment in an industrial area, if you are trying to build a true funeral model for the animal care industry, it has to be a place that people will feel comfortable going to. So if you have to lock the doors and chain the windows after 5 o’clock in the evening, I would probably suggest that you would be nothing more than a back door provider. What I mean by that is that the services will be rendered through the community but it won’t be your face as a part of it because you are nothing more than going in the back door of a veterinarian office, handling the cremations and giving them back to the veterinarian and the face of the business represents the veterinarian, which is totally fine. There are a lot of successful operations that are doing it, but the challenge that you have with that model is the fact that veterinarians are not interested in memorial care services taking place at their place of business. You are not going to have a committal area where the pet will be laid out and the preacher will come in and your family and friends will walk in and you’ll have a moment of silence and the ability to say goodbye, or video that might be running in the background that sort of tells the entire story. You know, the same experiences you have today at a funeral home where you go and you express grief and you take comfort. It is important for you to have that somewhere in mind in the idea of where the real estate is located.

BOJ: Is networking with veterinarians and others important to the model you propose?

Steve: Well, certainly the business that we see available is one we see as a network that allows us the ability to identify those who we would say “first of call.” In the animal care industry, obviously “first to call” would be your veterinarian network. If they are adamantly against the thought of handling these services internally, then this is a network for us to be able to build this service as an extension of service. That still rings true in regards to the funeral side. If you have a funeral network in the area that is not interested in handling the service but certainly wanting to be an outlet for families who need that support, there is an opportunity to be an extension of service for them as well. So literally you are building yourself a business model which has positioned itself within a network of veterinary clinics, groomers, humane societies, kennels, you name it. Anyone and everyone that is affiliated to the animal care network.

BOJ: You talk about “championing” the shift toward pet memorialization. How does Matthews Cremation help go about that?

Steve: Well, for example, we recently hosted a six city business development conference. We had one in San Francisco, one in Phoenix, in Texas, Florida, Ohio and in Massachusetts. The last one we completed was in August, and we spent a couple of months sort of digesting the material and digesting the reaction. We had over 500 guests attend the conference, so we had a great turnout. I’ve been getting a lot of calls since the last one simply asking when will we host another one. We are considering conducting another series throughout the country. We’d like to continue bringing people who have gone through the experience and have built the business model who can share their scars or all the different things that they’ve gone through so that this way anyone that comes to the conference is given an armful of ammunition with which to go back to their market and begin building the business model.

We have built an arsenal of collateral materials that can be placed at all the neighboring veterinary clinics that, if you know that a veterinarian doesn’t want to speak of death because that may symbolize failure, can be placed that are nothing more than educational pieces so that at the time of loss, it gives people comfort in knowing that there is a place to go to.

We have built a free standing pet loss website called Faithful Forever Pets at www.faithfulforeverpets.com. That actually shows a lot of illustrations. It’s basically a piece that we include with equipment because when people look to buy equipment, especially early entrepreneurs, there are two things we try to provide. Number one, we have a great finance network to help people starting their business. Number two, we love to give you all of the collateral pieces at a modest cost, because we know that advertising and brand developing and all of the awareness components that have to be a part of the equation can cost a substantial amount of money. So what we have done is we have built a boiler plate for anyone wanting to get in that can give you these tools that can literally be branded. You can leave them as Faithful Forever, which is our template, or you can literally have it transferred as something of your own. All of the pieces look and feel exactly as you.

BOJ: What is the time line from someone getting interested in the business, to actually getting started?

Steve: It’s kind of tough to quantify this because as you can imagine, the fuse is rather long. The first thing is that they need to understand the working capital to make it successful, and then they need to begin identifying a location. Once they get their location identified, then the zoning component comes in place, and then we file on behalf of the client all of the permitting components, meaning, pretty typically you have to file an air permit. It’s usually nothing more than formalities. We’re guaranteed in all 50 states. Our engineers do that. We do a lot of layout drawings. Literally we give all of the support within the framework of the company. These aren’t add-on costs. We’re doing all we can to guarantee their success.

BOJ: What would you estimate the range of start up costs are to enter this business?

Steve: The real estate is a major variable number because that’s a tough number to kind of get your hands around because of the market variances. Typically in equipment, you could probably start at an entry level that would get you in the business for about $50,000 up to $100,000. You need a vehicle. Plus you need plenty of working capital. You know, prepare yourself for the haul. Most businesses we see somewhere in the range of about $250,000 to $300,000 for start up needs. But to get into your equipment and the development side, the gradual side of that equation, it can be as low as a $50,000 investment. | BOJ

Online at www.matthewscremation.com Email: sschaal@matw.com